Rivers Pittsburgh, ONO price, new Rivers rises; market softer; Ford again tops actives list

By Paul Deckelman and Paul A. Harris

New York, May 30 - The high-yield primary market got busier on Wednesday, pricing a pair of new deals after having been shut out on Tuesday.

Casino operator Rivers Pittsburgh Borrower LP came in with a downsized $275 million offering of seven-year secured notes, pricing off the forward calendar. After those bonds priced, traders heard them trading up by a point or two.

Also pricing was a quickly-shopped $310 million offering of senior secured notes from Nara Cable Funding Ltd., a unit of Spanish cable and broadband operator Grupo Corporativo ONO SA. That deal was structured as a mirror tranche replicating the terms of the company's existing bonds, which are due in 2018. It came to market too late in the day for a meaningful aftermarket.

Away from the new deals, traders saw the junk market mostly easier, in line with a fall in equities, although not of the same severity as the stock market's Europe-inspired downturn.

However, ATP Oil & Gas Corp.'s recently battered bonds bucked the overall negative trend and gained a point or more, traders said.

Ford Motor Co.'s bonds, and those of its Ford Motor Credit Co. LLC auto loan-financing unit once again easily dominated the Junkbondland most-actives list, although traders noted that much of the buying was being done by high-grade investors following the recent ratings upgrade by Moody's Investors Service.

ONO sells 8 7/8% mirror notes

During Wednesday's primary market session, two issuers raised a total of $539 million. Each one brought a single tranche of notes.

Nara Cable Funding Ltd., a special purpose vehicle of Spanish cable television,iInternet and telephone services provider Grupo ONO, priced a $310 million issue of notes mirroring its existing 8 7/8% senior secured notes due Dec. 1, 2018 (B1/B+).

The notes priced at 85, resulting in a 12.298% yield to maturity.

The reoffer price came on top of price talk.

The deal played to a $350 million order book, according to a trader from a high-yield mutual fund who followed the transaction.

The mirror notes came at a 100 basis points concession to the existing dollar-denominated 8 7/8% notes due 2018, the trader added, noting that some of that price differential could be attributable to the ongoing negative financial headlines dogging the Spanish sovereign.

Bank of America Merrill Lynch, Credit Agricole and Deutsche Bank were the joint global coordinators and joint bookrunners for the quick-to-market deal.

BNP Paribas, J.P. Morgan and SG were also joint bookrunners.

The mirror notes will be non-fungible with the existing notes, but will be treated as a single class under the indenture.

Proceeds will be remitted to Cableuropa and used to repay a portion of the outstanding debt under its 2005 senior facility.

The company priced the original $1 billion of the 8 7/8% notes at 96.934 to yield 9 5/8% on Jan. 26, 2012.

In addition there are outstanding euro-denominated 8 7/8% notes due Dec. 1, 2018.

A €700 million issue priced at par in October 2010, and a €300 million deal priced at 99 to yield 9.06% in July 2011.

Rivers Casino at tight end

Rivers Casino Pittsburgh priced a downsized $275 million issue of seven-year senior secured second-lien notes (B3/B) at par to yield 9½%.

The yield printed at the tight end of the 9½% to 9¾% yield talk.

The amount was reduced from $300 million, with $25 million shifted to a planned term loan.

Goldman Sachs was the left bookrunner for the debt refinancing deal.

Wells Fargo and Credit Agricole were the joint bookrunners.

New Rivers Pittsburgh bonds better

When the new Rivers Pittsburgh 9½% senior secured second-lien notes due 2019 were freed for secondary dealings, a trader saw the casino operator's issue at 101¾ bid on the break, and later saw those bonds edge as high as 102 bid, well above the par level at which the $275 million deal had priced.

A second trader quoted the new paper moving around in 101-102 context, while a third had them going home at 101¾ bid, 102¼ offered.

Nary a Trace of Nara

The new Nara Cable Funding 8 7/8% senior secured notes due 2018 priced too late in the session for an aftermarket.

Trader also did not see any kind of activity in the Spanish cable company's existing notes of the same class, including the$1 billion of those notes which were sold back in January, also as a mirror tranche to the existing bonds.

Recent bonds ease slightly

A trader saw a little activity in several recently priced bond issues.

For instance, he said that NGPL PipeCo LLC's 9 5/8% senior secured notes due 2019 were trading around 102¾ bid, 103½ offered, versus Tuesday's levels at 102 7/8 bid, 103 3/8 offered.

The Houston-based natural gas transportation and storage company priced its $550 million offering of those bonds off the forward calendar at par on May 22, and they proceeded to trade up to 102 in initial aftermarket dealings, and stayed above that level.

He also saw Consolidated Communications Holdings, Inc.'s 10 7/8% notes due 2020 at 100 3/8 bid, 101 1/8 offered.

That was in slightly from Tuesday's quotes around 100½ bid, 101½ offered.

The Mattoon, Ill.-based telecommunications service provider priced its $300 million offering - downsized from an originally announced $350 million - off the forward calendar on May 22 at 99.345 to yield 11%.

The new bonds moved up by as much as a point in the aftermarket, and have pretty much held those gains.

'An ordeal'

Away from the new issues, a trader said that "it was a little quiet, with some things trading down."

A second opined that "it just seems to be an ordeal today to try and trade anything."

He said that "the Street was kind of slow today. I'm sure there was a lot of back and forth of accounts trying to buy stuff at lower prices and to get the sellers to go along - there's been some trading that way.

"There's been stuff for sale, and there have been guys stepping up to buy it."

He noted that "the market was softer during the day, but it doesn't feel the same as the equity market - it doesn't feel like it's taking the same beating as the equity market."

Stocks, which had firmed across the board on Tuesday amid investor hopes that a way could be found to address Europe's nagging debt and deficit problems without forcing troubled Greece out of the euro zone, gave it all back on Wednesday and then some, amid renewed investor angst over the deteriorating situation. The bellwether Dow Jones Industrial Average plunged by 160.83 points, or 1.28%, to end at 12,419.86, while the broader Standard & Poor's 500 and Nasdaq Composite indexes were each off by more than 1 full percentage point on the day.

The second junk trader called Wednesday's session "an interesting day. With the equity markets so soft and all of the noise on the tape about what's going on in Europe and the [U.S.] economic numbers, I would have thought that you would see some more weakness" in junk paper.

"There seems to have been some buy interest for stuff. If there's been a lower level, it's attracted some "buy "interest. It doesn't look like the equity market at this point, anyway. We'll see about tomorrow [Thursday]."

He said that at his shop, "we see a number of accounts that are looking to add to positions on weakness, so it doesn't exactly look as though they are losing as much cash as last week," when both of the major services that track the flow of monies into and out of high-yield mutual funds saw huge outflows from those funds, whose behavior is seen as a generally reliable barometer of junk market liquidity trends.

He added that "we'll see if there's any follow though to that" when the latest fund-flow estimates from Thomson-Reuters' Lipper AMG division and from EPFR Global circulate through the junk market as usual on Thursday afternoon.

Market indicators easier

Statistical indicators of market performance retreated across the board on Wednesday, unable to hold Tuesday's broad gains.

The Markit Group CDX North American Series 18 High Yield Index fell by 7/8 point on Wednesday to end at 93 3/16 bid, 93 5/16 offered, after having risen by 3/8 point on Tuesday.

The KDP High Yield Daily Index meanwhile lost 22 basis points Wednesday to end at 72.36, after having risen by an almost identical 20 bps on Tuesday. Its yield rose by 6 bps Wednesday to 7.08%, after having come in by 7 bps Tuesday.

And the widely followed Merrill Lynch U.S. High Yield Master II Index saw its four-session winning streak snapped on Wednesday, falling by 0.111%, after having risen by 0.176% on Tuesday

The latest loss left the index's year-to-date return at 4.986% Wednesday, down from 5.103% on Tuesday. The cumulative return is also well down from the peak level for 2012 so far, 6.80%, set on May 7.

Ford flurry continues

Among specific names, a trader said that "Ford was trading all day long," once again grabbing most of the top spots on the high-yield most-actives list, even though it is now a split-rated names, with two of the three major ratings agencies characterizing it as investment grade.

"Ford was the volume leader, even though they're sliding over to high grade," another trader said, noting that at his firm, the high-grade traders have taken over the bonds of the Dearborn, Mich.-based Number-Two U.S. carmaker.

Even so, he said, "if you look at Trace, of the top 12 items" listed in the high-yield trading arena, "10 of them are Ford."

Another trader estimated that parent Ford and Ford Credit were holding down 11 of the top 15 slots.

For instance, Ford Credit's 5 7/8% notes due 2021 were seen to have traded well over $50 million bonds by late afternoon. They were up about ¼ point at 114 3/8 bid.

Ford Credit's 7% notes due 2015 were unchanged at 111¾ bid, on volume of over $40 million, a market source said.

Parent Ford's benchmark 7.45% bonds due 2031 traded almost $30 million by mid-afternoon, with a trader seeing them down 1 point on the day at 129½ bid, 130½ offered.

A trader said he doubted very much that a lot of junk accounts were still playing in Ford, given the low yields, by junk market standards, since many of the bonds trade well above par, depressing their yields still further. The 7.45% paper, for instance, was yielding just over 5% Wednesday afternoon, while the Ford Credit 5 7.8% was yielding just under 4%. The 7% 2015 notes were yielding about 2.7%.

ATP bucks the trend

Among the generally easier stance where most of Wednesday's bonds ended up, there were a few standouts.

One was Houston-based offshore energy exploration and production operator ATP Oil & Gas Corp., whose 11 7/8% second-lien senior secured notes due 2015 have recently been trading as low as under the 50 bid level.

However, on Wednesday, those bonds were seen as high as 54 bid, "bucking the trend," a trader said.

Clearly they were better than Tuesday's levels, which hovered around a 50-51 context, a trader said, noting that over $15 million of the bonds had changed hands, making it among the busiest non-Ford issues.

There was no fresh news out that might explain the rise.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.